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Our NewsletterIssue No. 45: SPECIAL UPDATE - Rebates Redux: Assessing the Costs and Benefits of Reform
Three months ago, Alex Azar, the HHS Secretary, explained, in his typically blunt fashion, why the Trump Administration wanted to end the “hidden system of kickbacks to middlemen.” Azar was referring to payments extracted from drug manufacturers by powerful pharmacy benefit managers (or PBMs), companies that determine the medicines that patients can access under their insurance plans. Azar left little doubt why change was necessary. “Every day,” he said, “Americans, particularly our seniors, pay more than they need to for their prescription drugs.” By ending “this era of backdoor deals,” he continued, President Trump will “deliver savings directly to patients when they walk into the pharmacy.” In short, the President wants to lift the burden of drug costs for patients. He is not out to cut federal spending or transfer wealth from one industry to another. He wants people who are sick to save some money and improve their health. That has been the Administration’s intention from the start, and it has achieved notable – though often unnoticed -- success. The Food & Drug Administration took the first big step by easing approval of generic medicines to increase competition and drive down prices. The Bureau of Labor Statistics reports that the pharmaceutical price index is down 0.4% for the year ending March 31, compared with a 1.9% increase in U.S. prices overall. Converting drug rebates to consumer discounts is the Administration’s second big step. We explored the measure at length in No. 43 of this newsletter, but, the rebate proposal is so important that developments in the past two weeks prompted this update. READ MORE HERE. |
What Others Are Saying"The anger directed at the pharmaceutical and biotech industries overall is misdirected. The single biggest driving force for increased health-care spending in the U.S. is the rising cost of labor, not drugs." "Even if pharmaceutical spending were rising as a share of total health care spending, but that rise was due to pharmaceutical investments driving down expenditures in other health care areas (e.g. a reduced need for more expensive surgeries), then it would still be inaccurate to argue that pharmaceutical spending is driving overall health care inflation." |